Vanguard Treasury Money Market
fund has closed to new investors for the first time in more than a decade.
The fund (ticker: VUSXX) was closed to new shareholders Thursday, but existing shareholders can make purchases without limits, according to Vanguard, which manages $5.3 trillion in global assets.
Last month the $39.5 billion Treasury fund brought in a record $7.3 billion of cash, according to Lipper Refinitiv, as investors crowded into safer investments during the severe market volatility. Overall, government money-market funds accumulated $901 billion of investor cash over the six weeks ended April 15.
Just as investors flocked into government money-market funds last month, the Federal Reserve cut interest rates to zero, driving Treasury yields broadly lower and reducing the potential yield of the funds for new investors.
The last time Vanguard closed its Treasury Money Market fund was in 2009, in similar market conditions. The
Vanguard Federal Money Market
fund (VMFXX), which manages $183 billion, is still open to new investors.
The 10-year yield closed at 0.61% on Thursday. As of April 15, the Vanguard Treasury fund offered a yield of 0.64%.
“An increase in demand for high-quality government money market funds, combined with extremely low yields on U.S. Treasury securities, may have the effect of reducing the Fund’s yield, as new cash flow is invested in lower-yielding securities,” the firm wrote in a statement. “Vanguard is taking this prudent step to temper cash flows and will continue to monitor the Fund and employ additional measures if needed. Vanguard has taken similar pre-emptive measures during prolonged low-interest rate environments.”
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